Jupitermedia's Releases 4Q 2007 Results; Leaves Unanswered Questions

On Monday, Jupitermedia (NASD: JUPM) reported its full year and fiscal results for the fourth quarter 2007. The company reported a slight revenue increase in 2007, but earnings per share came in at a negative $2.13 per share. This earnings number is discouraging and a bit misleading. Excluding its one-time charges and non-cash items, their earnings for the year would have been $0.06 per share.

There are two items to note regarding this release. First of all, the company is still producing a good deal of cash flow. Adding back depreciation, amortization, and its non-cash goodwill write-down, the company produced cash flow before capital items of over $0.62 per share. I look forward to the company's release of its cash flow statement so that I can determine a true “owner earnings” number, and update my valuation of the company.

The second item to note, and this drives me crazy, is the impairment charge of $82.2 million, or $2.28 per share. Jupitermedia still has $143 million in goodwill on its balance sheet. Total shareholder equity is still $160 million, or $4.44 per share. So, why write-down only $82.2 million? Maybe the company can’t due to some accounting rule, but it is the season for massive write-downs of fake assets. There is not only this, but the company provided no information about this impairment charge.

What company that it purchased is now considered worthless? Or, what companies (plural)? I don’t think investors believed that the company had equity of $236 million at the end of last quarter, so why not be candid and forthcoming with shareholders now? Maybe the conference call will shed some light, but I would really like to hear from management about how and why things didn’t work out for whatever acquisitions that are now considered worthless.

Disclosure: The author is long Jupitermedia.